Saudi index surges to 24-week high

Riyadh, April 29, 2009

Saudi Arabia's index surged to a 24-week high lifted by Saudi Basic Industries Corporation (Sabic), its largest stock, and other Gulf Arab markets rallied as confidence returned following broad declines over the previous 10 days.

The Saudi, Dubai and Abu Dhabi benchmarks all rose more than 2 percent as gains in US markets late Tuesday bolstered confidence locally.

With Asian stocks rallying early Wednesday to snap two days of losses, Gulf investors were willing to take on more risk, driving volumes higher on six of the seven regional indexes. Sabic climbed 5.3 per cent, lifting the Saudi measure.

Sabic is the largest listed Arab stock and the bellwether for the region. Its shock first-quarter loss last week sparked a slump on Gulf markets, but the Saudi index has now risen in five of the past six sessions.

'Saudi Arabia's economy is well cushioned from the global downturn,' said Sunil Dhall, vice-president at Gulf Baader Capital Markets.

UAE stocks have been rocky, with the Dubai and Abu Dhabi indexes falling more than 9 percent from April 19 to Tuesday's close, as grim first-quarter earnings and the prospect of a flu pandemic scared investors in the region's tourist and transport hub.

But these concerns were sidelined on Wednesday as cheaper prices enticed more traders to the market.

'Some stocks dropped by 10 to 12 percent in a couple of sessions and this allowed investors to step in at lower prices. 'This is a two-way market, with short term traders exploiting volatility and medium to long-term investors buying on drops to build or reposition their portfolios.'